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House Democrat offers measures to block Trump's payroll tax deferral

September 4, 2020
In The News


A House Democrat on Friday introduced two measures in an effort to block President Trump's initiative to defer payroll taxes.

Rep. John Larson (D-Conn.), the chairman of the House Ways and Means Committee's Social Security subpanel, introduced a bill to nullify IRS guidance implementing the Social Security payroll tax deferral. He also introduced a Congressional Review Act (CRA) resolution to overturn the IRS guidance.

Larson introduced the measures along with several other lawmakers, including Ways and Means Committee Chairman Richard Neal (D-Mass.). The House members introduced the measures after Senate Democrats also launched an effort to overturn the guidance, which implements a memo Trump signed last month.

Senate Minority Leader Charles Schumer (D-N.Y.) and Senate Finance Committee ranking member Ron Wyden (D-Ore.) on Wednesday sent a letter to the Government Accountability Office (GAO) asking for a determination about whether the IRS guidance is a rule for purposes of the CRA.

If the government watchdog determines that the guidance is a rule for CRA purposes, Senate Democrats would be able to force a vote on the Senate floor on a resolution to overturn the guidance. But the measure would face an uphill battle given the Republican majority in the chamber.

A spokesperson for Larson said there hasn't been a response yet from GAO.

Under the IRS guidance, employers can stop withholding employee-side Social Security taxes through the end of the year for workers making under $4,000 biweekly. The money would then be collected by increasing the amount of taxes withheld from workers' paychecks in the first few months of 2021.

The federal government is set to defer payroll taxes for its employees. However, many private-sector businesses are expected to not participate because they don't want to put their workers in a situation where they could receive less in take-home pay next year.

Democrats have expressed concerns about the impact of Trump's payroll tax deferral on Social Security. In a statement on Friday, Larson called the deferral Trump's "first step in defunding Social Security."

Treasury Secretary Steven Mnuchin said at a hearing earlier this week that as it currently stands, the deferred taxes would be paid. He added that if Congress passes legislation that forgives the deferred taxes, the legislation would also transfer money from the general fund to the Social Security trust fund.